"Badges? We don't need no stinkin' badges"

While working feverishly in my head (which means I haven't written a word) on my next post which will deal the question whether the wealthiest pay an unjust share of federal taxes . I heard a story on NPR I thought worth sharing.

Morning Edition host Steve Inskeep interviewed Ellen Schultz, the author of "How Companies Plunder and Profit from the Nest Eggs of American Workers". I have my own inclination to be suspicious of business (evident in my last blog "Why I hate Michael J. Fox") as it seems most of corporate culture revolves around maximization of profit with little attention to social responsibility. Schultz a former reporter for the Wall Street Journel strikes me as a credible researcher - I am curious on how accurate her book is. It is a bit frightening to hear of such abuses while on some level hardly surprising. Here is a brief excerpt from the NPR website  

As companies have been moving away from traditional pension plans, they have been shifting employees to new retirement plans, such as 401(k)s, that transfer the cost — and the risk — to workers.

Companies have claimed for years that old-style pensions were unsustainable. Author Ellen Schultz tells Morning Edition host Steve Inskeep that there's another explanation. "The main narrative is that [companies] are struggling to pay both their pensions and these unexpectedly high health care costs for the retirees," Schultz says. "What isn't known is that companies were well-prepared for this phenomenon. The plans were in fact significantly overfunded. They had more than enough to pay every dime for every person currently employed and already retired."

Schultz investigated the changes in pension plans as a reporter for The Wall Street Journal . You can listen to the interview by clicking here
http://www.npr.org/player/v2/mediaPlayer.html?action=1&t=1&islist=false&id=140344871&m=140895203

and you can read a longer excerpt here

http://www.npr.org/books/titles/140334949/retirement-heist-how-companies-plunder-and-profit-from-the-nest-eggs-of-american?tab=excerpt#excerpt

I looked for some reviews to see how the book was received and its credibility - so far so good.  I will keep my eye out for more as they are written.  Below are links to two of them.

http://www.nytimes.com/2011/09/18/business/when-retirees-are-shortchanged-for-corporate-profits.html?scp=1&sq=Retirement%20Heist%27:%20How%20Firms%20Trimmed%20Pensions&st=cse

http://www.publishersweekly.com/978-1-59184-333-7

Why I hate Michael J. Fox……………………………

Because he played a character called Alex P. Keaton  on a sitcom called Family Ties in the early 80’s. Keaton, a fictional character, represented Ronald Reagan’s America.  A land favored by the Creator that looked like a scene from a Norman Rockwell painting.  A country abound with opportunities.  If you couldn’t make it on your own there was no room for you.

"The Alex Keaton generation was rejecting the counterculture of the 1960s and embracing the wealth and power that came to define the '80s."

Over the last 30 years this Keatonesque mindset has led us to worship big business and the CEO’s who run them.  You can’t go very far without seeing the faces of CEOs plastered across magazine covers – leaning up against their desks with their sleeves rolled up like they just hard working stiffs.  Guys like Dick Fuld who led Lehman into the business of subprime mortgages. Stan O’Neal who guided Merrill Lynch's from fee businesses like asset management into creating collateralized debt obligations, which were largely made of subprime mortgage bonds. And let’s not forget Dennis “Mr.$15,000 dog-shaped umbrella stand” Kozlowski CEO of Tyco International, convicted in 2005 of crimes related to his receipt of $81 million in purportedly unauthorized bonuses, the purchase of art for $14.725 million and the payment by Tyco of a $20 million investment banking fee to a former Tyco director.

Much like a lot of politicians who long for the good old days in the U.S of A,  I too long for the good old days.  Not the ones they do - when America had “values” – never mind there were Jim Crow laws in effect and that we’ve needed at least three waves of feminism to get y’all up to second class citizens.  I long for different set of good old days.

Days when we didn’t worship the Captains of Industry and the businesses they ran – I miss when we viewed business and those who ran them with a bit more of a  jaded eye.  To recall what U.S. political and economic commentator Matthew Josephson (1934) called the economic princes of his day - Robber Barons.

President Theodore Roosevelt spoke of the "malefactors of great wealth" and embraced a public, political role for the government in "anti-trust": controlling, curbing, and breaking up large private concentrations of economic power.

With this jaded eye legislation was passed to protect the consumer – like  the Glass-Steagall Act, a cornerstone of Depression-era regulation to prevent bankers from turning our economy into a giant gambling casino for the super rich – as they had done in the 1920’s.   In the late 1800’s and early 1900’s, the U.S. government struggled with anti-competitive practices between businesses. Part of the concern was related to artificial pricing practices that harmed consumers. In response to these monopolies, cartels, and trusts, Congress passed two major pieces of legislation:  The Sherman Antitrust Act and the Clayton Act.   I am not advocating a reenactment of one hundred year old laws but I am trying to remind us of a day when we didn’t trust big business to take care of the average American.  

I am asking us to hold companies to a higher standard than just optimizing corporate profits and increasing stock prices – we should be expecting, no - demanding them to demonstrate corporate social responsibility .

“(CSR, also called corporate conscience, corporate citizenship, social performance, or sustainable responsible business)[1] is a form of corporate self-regulation integrated into a business model. CSR policy functions as a built-in, self-regulating mechanism whereby business monitors and ensures its active compliance with the spirit of the law, ethical standards, and international norms. The goal of CSR is to embrace responsibility for the company's actions and encourage a positive impact through its activities on the environment, consumers, employees, communities, stakeholders and all other members of the public sphere. Furthermore, CSR-focused businesses would proactively promote the public interest by encouraging community growth and development, and voluntarily eliminating practices that harm the public sphere, regardless of legality. CSR is the deliberate inclusion of PI into corporate decision-making, that is the core business of the company or firm, and the honoring of a triple bottom line: people, planet, profit.” 

http://en.wikipedia.org/wiki/Corporate_social_responsibility

Until we can get companies to demonstrate CSR – I would like to keep the concept of robber barons alive.

So let’s take a moment to remember those great captains of industry who were described by Josephson for their most ruthless actions, their plunders and conspiracies, and their lack of ethics. The system they created led to the Great Depression. 

And maybe just maybe if we could hold companies accountable and they were able to embrace their social responsibilities I just might be able to forgive Michael - I hear he is a nice guy.  I am sure knowing what we know now and given another chance he would have turned Alex P. Keaton into a tree hugging, progressive like me ;)

     John Jacob Astor (real estate, fur)—New York City

    Andrew Carnegie (steel)—Pittsburgh and New York

    Jay Cooke (finance)—Philadelphia

    Charles Crocker (railroads)—California

    Daniel Drew (finance)—New York

    James Buchanan Duke (tobacco)— Durham, North Carolina

    James Fisk (finance)—New York

    Henry Morrison Flagler (railroads, oil)—New York, Florida

    Henry Clay Frick (steel)—Pittsburgh and New York City

    John Warne Gates (barbed wire)

    Jay Gould (railroads)--New York

    Edward Henry Harriman (railroads)—New York

    Mark Hopkins (railroads)—California

    Andrew W. Mellon (finance, oil)—Pittsburgh

    J. P. Morgan (finance, industrial consolidation)—New York City

    Henry B. Plant (railroads)—Florida

    John D. Rockefeller (oil), Cleveland, New York

    Charles M. Schwab (steel) Pittsburgh and New York

    John D. Spreckels (sugar)— California

    Leland Stanford (railroads)—California

    Joseph Seligman (banking)

    Cornelius Vanderbilt (water transport, railroads)--New York

    Charles Tyson Yerkes (street railroads)--Chicago

Troubling news in Andy Land

I heard this morning that the Census Bureau reported another 2.6 million people slipped into poverty in the United States last year, and the number of Americans living below the official poverty line, 46.2 million people, was the highest number in the 52 years.  The nation's official poverty rate in 2010 was 15.1 percent, up from 14.3 percent in 2009 ─ the third consecutive annual increase in the poverty rate.   Additionally the real median household income in the United States in 2010 was $49,445, a 2.3 percent decline from the 2009 median. 
http://www.census.gov/ 

This started the voice in my head that sounds an awful lot like the whiny old curmudgeon – Andy Rooney, or at least, that’s what I think the voice sounds like.  Although inevitably the voice morphs into a variant of Christopher Walken as all my voices do.  My wife thinks my eyebrows look like Andy Rooney’s and but thinks I always sound like Walken.

Why are the numbers of U.S. millionaires expected to double before end of decade I whine, feeling the accelerated growth of my left eyebrow as I begin to morph into Andy.

Why are income trends among 90% of Americans relatively unchanged over the last decade.  I ask with a sneer,  as the Rooney metamorphosis accelerates - my right eyebrow extends to touch my left one.

Whoa - I quickly shake my head as I realize I am actually changing into Mickey Rooney and I can’t afford to get any shorter (for those who have no idea who the 170yr old former child actor is, substitute Andy Dick into the punch line – that should work).

So back to the matter at hand – the number of people who are rich and the number who are poor are both increasing?  Not that one causes the other but it would seem if things are going well for a number of people then at least things shouldn’t get so much worse for so many?  I understand that is a simplistic statement but clearly y’all have heard about the issue of the redistribution of wealth. Why is only one segment of the population (and a small one at that) doing so well?

And another point - now the rich have an additional burden – the Republicans in an effort to justify not increasing their taxes refer to the rich as the “job creators”.  But as the number of “job creators” have increased  (the number of U.S. millionaires increased by 8.3% in 2010, according to a report by Spectrem Group) the number of jobs have decreased causing as discussed early –increased poverty and lower average incomes.

That's a far cry from the 1950s, when the suburban American dream ruled: the bottom 90% of Americans controlled about 68% of the economy.  http://money.cnn.com

These are complicated issues and I am not even sure how much they have to do with each other – certainly there is no single cause or solution for that matter.  I just find it worth sharing and I find the trends extremely disturbing………….

And when that happens the Christopher Walken voice in the role of Vincenzo Coccotti starts playing in my head and no amount of cowbell can stop it. 

Ponzi sues Perry for character slander

Charles Ponzi, the original Ponzi schemer, was an Italian immigrant, "a razzle-dazzle kind of guy" with "tremendous charisma."

We Italians haven't had a lot of heroes to look up to in the last hundred or so years - sure we had our hey day of a bunch of Renaissance guys running around in long robes with names that sound like pizza toppings. Name me an Italian in the last century or so. Not many huh? Charles Ponzi was an entrepreneur - probably the kinda of guy that today's Koch Brothers would hang with - he probably would have been a Republican - a proponent of less government and laizze-faire. Less regulations my friend (wink).
Having said that all tongue in cheek of course (I mean no disrespect to my Republican or Tea Party friends - said in the best Joe Pesci voice you can muster in your head) - but I must speak up for my brethren Charles, who would be greatly offended that Governor Exemplar of Texas Rick Perry, Republican candidate for President has characterized Social Security as a Ponzi scheme.
Charles clearly was in the business of swindling people - setting up a fraudulent scheme to bilk people out of their hard earned money. Charles had bad things in mind when he started - from the "gitty up" as they say in Texas. Charles would have been horrified to be linked to a government program that was set up help people - to use their money to help themselves.
Does social security need reform - I think we can all agree upon that. Even the "Great Communicator" himself said "the Social Security system must be preserved." and as we all know Ronnie Regan was no fan of the government.
So come Rick - let's leave Charles alone. You don't want trouble with "those" people. Let's let sleeping fish lie and let's get Social Security fixed.

Social Security is a good thing - it has provided a return on its participant's investment and has helped those in need - it has worked for years and I hope it will continue to work for years to come.

Wow - this is a lot harder than I thought .....

So when the going gets tough - change your job description.   I posted my first blog this year! - unfortunately it seemed like a year ago.  That was followed by my second post which was slightly less well researched and written than the first one.  I thought I would pumping these blogs out on a weekly basis.  Not so much.......

My goal was to use my scientific background to provide thoughtful detailed analysis of political and economic issues so that I could better understand them and develop my beliefs and share that information with my friends.  Apparently that is way too hard for someone who has a full-time job, as many interests as a I do an adorable wife and a mild case of A.D.D.  .......SQUIRREL!
So rather than than feel bad because I don't have the time to do what I want  - I am going to change the charter of this blog -
I am going to still write about political issues (for the most part) but I am not going to provide thorough
detailed technical analyses but rather provide thoughtful and slightly researched issues with a dash of my personality.  So exit the scientist and enter the personality.